JSW Steel plans to acquire Italy's Lucchini for sub USD 100 mn

Written by PTI | Mumbai | Updated: Sep 16 2014, 21:03pm hrs
Private steel major JSW Steel is planning to acquire Italy's Lucchini SpA for less than USD 100 million and start operations in the current calendar year.

"We are planning to acquire Lucchini as given a binding bid to government. The acquisition cost will be sub-USD 100 million and we hope to start operations by end of this calendar year," JSW Steel Chairman Sajjan Jindal told reporters on the sidelines of 'M Visvesvaraya lecture series' at Nehru Science Centre here.

The deal would not involve taking on any debt from the bankrupt company and would not require fund-raising, Jindal said adding that it is in the best place (of bidders).

Lucchini, Italy's second-largest steel plant by capacity, was declared insolvent in 2012 and placed under special administration after plunge in European demand for steel since 2008.

Lucchini is engaged in producing speciality long products like rolling mills manufacturing for European railways, bars for specialised auto industry and wire rod mills.

JSW plans to restructure the company after the acquisition takes place. It plans to supply basic steel from India, which will be added value to produce high quality steel and sold in the European market.

It also plans to produce steel in Lucchini through a newer and more environment friendly technology at a later stage, which would require large investment, Jindal said.

JSW Steel is also in the running to buy Italy's largest steel plant Ilva, having 10 million tonnes per annum capacity.

"We are starting due diligence to acquire Ilva. We are looking at acquisition of this unit in a very positive way. The acquisition needs very big investment, as it has lot of liabilities and it's a very complex project," Jindal said.

Commenting on future acquisition plans, he said, "We are open to ideas of acquisition in other geographies and we will acquire what suits our canvas. But we are looking at acquisitions in India because I believe India is the best place for producing steel."

Jindal pointed out that the power sector has to get consolidated overtime like steel industry.

"There will be a big change in the way power plants will be operating because Supreme Court is looking at how to regulate the whole system of coal mines. We will wait for SC decision, which is expected by this month. The government is going to come out with a progressive policy post Supreme Court verdict, because more than Rs 3,000 crore invested in power sector and we cannot afford such investment to die," he said.

Jindal said he is hopeful of growth, although the steel demand during the first 4-5 months of current fiscal hasn't seen much growth, but if country's GDP grew by 6 per cent, steel industry will see growth of 7 to 8 per cent.